I've got two businesses I'm looking to exit in the next year or so. One is an Amazon FBA store doing about $1.2M revenue, decent margins, private label. The other is a Shopify brand in the home goods niche, $800k revenue, strong email list, good social following. Both are profitable. I keep hearing conflicting things about multiples. Some say FBA stores are seen as riskier because of Amazon dependency, others say Shopify brands are harder to scale without paid ads. What's the real story? Which one actually commands a higher multiple in today's market?
Ecommerce
Selling an FBA store vs selling a Shopify brand: Which gets a better multiple?
From what I've seen in the lower middle market, Shopify brands with a real brand and customer list tend to get better multiples. FBA stores are often valued more like a cash flow stream with a 2-3x multiple, while a Shopify brand with strong retention can push 4-5x. But it depends heavily on niche and how much of the traffic is organic.
This is a good question. I sold an FBA store two years ago and looked at Shopify deals too. The FBA sale was straightforward but the multiple was around 2.5x SDE. The buyers were mostly aggregators who wanted clean operations. Shopify brands seemed to attract more strategic buyers but the due diligence was heavier.
what was the main reason you went with FBA instead of Shopify back then? Was it just the offer on the table or something else?
Honestly, it was timing. The FBA store had a buyer approach me directly and the process was simple. The Shopify brand needed more work to present properly. But in hidsight, I think I could have gotten a better multiple if I had waited and built up the brand story more.
I think the key is not the platform but the moat. An FBA store with a strong brand and repeat customers can get a good multiple. A Shopify brand that's just dropshipping or heavily reliant on Facebook ads is going to get a lower multiple. Buyers are smarter now about ad dependency.
There's also the size factor. At $800k revenue, the Shopify brand might be too small for some buyers, while the FBA store at $1.2M could attract more aggregators. But if the Shopify brand has strong margins and a clean P&L, it could still do well. I've seen smaller Shopify brands sell for 3.5x.
Have you considered selling both as a bundle? Sometimes a strategic buyer might want the Amazon channel and the Shopify brand together. Could get a better overall deal.
Bundling is interesting but I think it would complicate things. They are separate entities with different suppliers and operations. I'd rather keep them sepzrate. The point about the moat is well taken though. The Shopify brand does have a loyal customer base and decent organic traffic. The FBA store is more reliant on Amazon PPC.
If the Shopify brand has organic traffic and a real community, I'd lean towards that getting the higher multiple. But be prepared for a longer sale process. FBA deals can close faster because the assets are more standardized.